Departments Store Industry in the UK

Question 1 ( 250 words ) ?C ( 1 ) what are the cardinal drivers of alteration impacting UK Department shops? – You should name at least 3 in order of impact ; Identify the critical success factors ( critical for a company to win ) in this industry. –

The UK sections shop industry has faced intense competition over the last old ages due to new entrants in the vesture section chiefly from the superstores/multiples section leaders such us Tesco ( Largest UK Supermarket concatenation ) and Asda ( A Wall-Mart Company ) . In add-on, cheap-led concatenation shops like Primark are mounting force per unit area as they are surpassing taking shops such us Following and M & A ; S ( Financial times, July 12Thursday2005 ) . Figures from the Business Ratio study ( 2005 ) illustrate that compound growing gross revenues average between 2001 and 2004 has rose by 14 % . This instead level tendency has been impacted chiefly by worsening monetary values alternatively of ingestion stagnancy.

Robert Lynch ( 2006, p196 ) proposes three chief pillars to place the critical success factors, which are applicable for any industry. These are Customers, Competition and Corporation.

Looking at the elements presented by Lynch, and based on informations obtained from Datamonitor ( June 2006 ) and the concern ratio study on the sector ( 2005 ) ; the section shops industry in the UK has become more client oriented and regardless the population section that any company may aim, the overall committedness is to concentrate on an incorporate monetary value and value added offer.

As the competition is fastening, the 2nd factor islocation, distribution and right stock; a combination of touchable and intangible resources to guarantee that busy clients are expected to increase footfall outputs through sing premier locations, happening what they want easy and taking to high denseness gross revenues countries.

-Efficiency: By understanding the manner of associating the right merchandises with the right client base’s demands and life manner, the company is developing a comprehensive value concatenation programme through presenting several good patterns:

-Knowledge and Learning: Overall sensible eventuality over 3 % is available to the group. Based on uninterrupted analysis and know-how the company intends to near the right balance to hit its customer’s chief demands.

-Innovation:Fresher layout, better usage of infinite and fashionable vesture, For M & A ; S, its shop infinites have to present the right environment in order to pull more people and retain them as loyal clients.

By utilizing the scheme clock featured by Johnson and Scholes ( 2003 ) , M & A ; S concern scheme continues to aim sensed value in its portfolio of merchandises, but with the purpose of traveling off from place 5 to place 4 against clockwise. Over the last old ages the company has shown particular focal point on a in-between age section, which now is ageing. This scenario creates M & A ; S’s mission of pulling younger coevalss.

An of import determination on the strategic focal point implemented by M & A ; S and included in its 3-year program of redefining and transmutation is the manner the company underlines its precedence to understand the mentality and altering wonts of its current and possible client base. Nowadays, the definition of value and service ( chief stratetegic place for M & A ; S ) has changed germinating into a intercrossed portfolio between monetary value, handiness, fashionable manner and personality ( Financial Times, July 12 2005 )

Stuart Rose, company’s main executive has a clear place on the demand to endeavor on low monetary values, keeping quality and bettering presentation at every individual shop. Hence, base on the scheme clock, Mark & A ; Spencer aims at procuring trueness from its client base, likewise to former Chief Executive Roger Holmes’ plans, but looking into deriving clients and widening chances. Customers expect dynamic, fresh and fast changing portfolios at less premium monetary value.

Question 4 ( 150 words ) ?C Analyze the fiscal public presentation of your chosen company over the past 5 old ages and discourse the deductions of its fiscal state of affairs.

Answer:

M & A ; S five-year fiscal mentality reflects cardinal points on its profitableness, efficiency and growing as a company and investing determinations for market participants.

Mark and Spence 5-year Financial Highlights ( in 1000000s of ? )

2002

2003

2004

2005

2006

Gross

6939

7399

7728

7490

7797

6.63 %

4.45 %

-3.08 %

4.10 %

Operating Net income

525.9

678.7

807.8

648.8

855.8

29.05 %

19.02 %

-19.68 %

31.91 %

Net incomes Per Share

5.4

21.8

24.7

17.6

31.3

303.70 %

-13.30 %

28.74 %

77.84 %

Net Assetss

3081.3

2108.3

2454

909.2

1155.3

-31.58 %

16.40 %

-62.95 %

27.07 %

Net Debt

1907

1831.4

1994.7

2147

1729.3

-3.96 %

8.92 %

7.64 %

-19.46 %

CAPEX

290.5

311

433.5

218.5

326.8

7.06 %

39.39 %

-49.60 %

49.57 %

Beginning: Company’s Annual Reports and Author Calculations

Profitableness:

The company has shown a positive recoil from 2005 autumn and against industrial mean M & A ; S is maintaining up and surpassing its major competitor’s John Lewis gait. M & A ; S is presenting consistence in an expected stable public presentation with possible betterments, if the company manages to countervail monetary value decrease programs with value concatenation efficient patterns.

Quick Ratio ( 52 hebdomads 2006 ) = 0.39,it is refering as the company can merely cover 39 % of current debts. ( Worsening place )

Asset Use: 0.92, weak public presentation against industrial norm and chief rivals, intending that the degree of assets is high for the degree of gross revenues achieved.

Growth and Strategy:

Gross:After a reverse in 2004/2005, the company rebounded with a modest 4.1 % addition, which is below the industrial norm over the last four old ages and besides outperformed by major rivals in the top 5.

CAPEX:2005 was non a positive twelvemonth for M & A ; S as CAPEX place fell ; nevertheless, it was balanced out during the 52 hebdomads in 2006 in line with the 3-year program.

Investors:

Net incomes per Share:This is the attractive point for investors. M & A ; S has delivered as net incomes have followed a profitable tendency over the last five old ages.

Top Five UK Department Stores ( Financial Indicators )

Company

T/over

Net income Margin

Asset Use

Entire Debt/Net Worth

Gross saless growing

Report Average

03/04

9.0

02/03

8.8

01/02

7.7

03/04

1.55

02/03

1.56

01/02

1.53

03/04

48.2

02/03

42.7

01/02

26.1

6

M & A ; S Plc

8019.1

8.9

4.2

1.9

0.92

0.92

1.05

59.4

58.5

38.5

0

John Lewis Plc

4414.6

2.0

1.9

2.1

1.58

1.55

1.61

37.6

35.0

29.0

5

Following Plc

2516

14.1

13.7

14.3

2.16

2.22

1.90

228.0

105.9

5.4

16

Woolworths PLC

2120.1

1.1

0.9

-0.7

2.6

2.46

2.47

311.6

360.3

338.5

1

Debenhams Retail PLC

1810.2

8.0

8.9

8.6

1.44

1.41

1.38

54.8

47.2

50.3

7

Beginning: Business Ratio study 2005

Company Profile Decision:

M & A ; S is the prima section shop in the UK market in footings of turnover. It gross revenues public presentation over the last five old ages has shown a level growing compared to its equals impacted by price-led section shops such Primark. The company has non managed to increase its market portion in major concern lines such us dressing. Uncertainty remains as the company has to recover market portion, increase gross revenues more quickly and most of all improve liquidness place.